Deal Reached to Keep Atlantic City From Running Out of Cash

New Jersey Assembly Speaker Vincent Prieto, D- Secaucus. (AP Photo/Mel Evans)
New Jersey Assembly Speaker Vincent Prieto, D- Secaucus. (AP Photo/Mel Evans)

New Jersey lawmakers agreed Monday on an Atlantic City rescue package to keep the city from running out of money.

Leaders of the state Assembly and Senate reached a deal on a package of bills to help the nearly broke city, giving it five months to devise a plan for balanced budgets over the next five years.

The deal eliminated — for now — the threat of a state takeover, and resolved a nasty political fight that has raged since January and pushed the struggling resort ever closer to bankruptcy. The city had drawn up plans to pay its police and firefighters with IOUs, and is paying city workers only once a month to conserve the tiny amount of cash it still has.

The city would get a temporary loan of about $60 million, would be able to offer all its employees early retirement, and would retain its collective bargaining rights — something that would have vanished under previous proposals.

Casinos would not be allowed to opt out of a payment in lieu of taxes plan, even if voters authorize casinos in northern New Jersey.

“Unlike the initial bill, this pertains only to Atlantic City and is not an immediate state takeover,” said Assembly Speaker Vincent Prieto, who has drawn considerably political heat for not delivering on an aid package this year as he sought to preserve bargaining rights for unionized public workers. “Instead, Atlantic City’s locally elected officials will get the chance to right the ship.”

An Assembly panel approved the changes Monday, and the full Assembly will vote Thursday on revised bills. The Senate is expected to do so soon afterward. Gov. Chris Christie’s office did not immediately respond to a request for comment. He has twice vetoed Atlantic City aid packages in recent years.

“It’s very fair,” said Atlantic City Mayor Don Guardian said of Monday’s deal. “It’s up to us now to keep our sovereignty. The hope of partnering with the state helping us but holding our feet to the fire is the way to move forward. I’m going to have a much more blessed Memorial Day weekend.”

Atlantic City will get temporary loans of $30 million for the remainder of this year; $30 million to be applied to leftover 2015 debt, and another $15 million for 2017. The city also would be able to get at least $120 million each year from casinos under a payment-in-lieu of taxes bill that would last for 10 years.

The impasse surrounded the harsher provisions of a Senate aid package that originally would have allowed the state to seize control of Atlantic City’s finances and major decision-making powers in just over four months, including the right to unilaterally break union contracts.

The state still can wield that power, but only after its Community Affairs department determines that the plan Atlantic City comes up with is not workable. The city would be able to appeal that determination to the courts before the state can take over.